Perspectives

Corporate View: Manish Kapoor, Bharti Airtel Limited

Published: Nov 2012

With more than $1 billion of payments flowing in and out of the world’s fourth largest mobile telecoms provider, keeping the business running smoothly and providing a host of other operational treasury services falls to Manish Kapoor as Head of Airtel Centre of Excellence Cash and Bank at Bharti Airtel. With day-to-day operations covering Asian and African markets, can technology alone provide respite?

Manish Kapoor

Head of Airtel Centre of Excellence (ACE) Cash and Bank

Bharti Airtel Limited is the largest mobile service provider in India and the fourth largest mobile operator globally. The New Delhi headquartered business has operations in 20 countries spread across Asia and Africa. It employs more than 15,000 staff to service its 260m plus customers, generating annual turnover currently in excess of $13 billion.

The company’s mix of services includes mobile voice and data, fixed line, high speed broadband, IPTV, DTH, and turn-key telecom solutions for enterprises and national and international long distance services to carriers. Its public profile has been heightened over the past two years as title sponsor for India’s entry into the F1 Grand Prix calendar. In 2012 Bharti Airtel’s shared service centre project won the Highly Commended prize in Treasury Today’s Adam Smith Awards ‘Best in Class Benchmarking’ category.

Keeping payments flowing for the world’s fourth largest mobile operator calls for a tightly run operation says Manish Kapoor, Head of Airtel Centre of Excellence (ACE) Cash and Bank at Bharti Airtel. With day-to-day operations covering the company’s APAC, India and (soon to be) African units, the task has required some major process ‘surgery’. Has it all been worthwhile?

“We are trying to build a highly controlled environment for our cross-border payments,” says Manish Kapoor, Head of Airtel Centre of Excellence (ACE) Cash and Bank (C&B) at Bharti Airtel Limited. The need for such precise day-to-day management of payments is better understood when it is realised that the volume of transactions being processed is close to 90,000 per month, their value amounting to some $1 billion. Keeping the lid on matters is a full-on task that has Kapoor explaining his domain not as “hard core treasury” but instead as a “mix and match of the playable and treasury”. It is, he summarises, “an operational treasury function of the shared service centre”.

Despite the obvious hands on nature of the role, Kapoor has a strong academic background. In addition to being a qualified accounting technician he is a commerce graduate from Delhi University, with an MBA in Finance from the city’s JIMT Academy of Technical Education (JagMohan Institute of Management and Technology).

Knowledge and experience

Prior to arriving at Bharti Airtel’s ACE unit in November 2009, Kapoor had accrued a wealth of practical financial experience. Much of this had come from his previous position as a service delivery lead at Accenture Services. This saw him manage operations aligned with one of the biggest media firms as the client in an outsourcing business, affording him responsibility for the three critical financial processes of order-to-cash, procure-to-pay and record-to-report.

“Our main objective though is to ensure that we deliver on-time and error-free payments to our vendors, and to that end we are in the process of eliminating physical payments forms and documents used for executing cross-border payments. We are also heading towards more process automation.”

Now, Kapoor says the focus for him is very much on accounts payable treasury operations. As global process owner for APAC, India and Africa (a region that is yet to start in earnest for ACE), he manages a multi-site operation, co-ordinating with payables teams, ensuring operational service level agreements are met and driving year-on-year productivity gains in line with his forecasted budget.

“It’s about managing and streamlining the business across locations and geographies,” he states. For ACE C&B, this means applying industry benchmarking pointers to standard processes across the group, whilst at the same time ensuring guidelines for the standard operating procedure (and other best practice documents) for the treasury payables function are in place and adhered to. Over and above this, he liaises with Bharti Airtel’s banking partners to ensure all fund transfers and deposits and other routine operations are executed efficiently and, of course, he manages the cash forecast so that internal and external vendors are paid on time and that the business does not need to draw down on its banking facility. “Our main objective though is to ensure that we deliver on-time and error-free payments to our vendors, and to that end we are in the process of eliminating physical payments forms and documents used for executing cross-border payments. We are also heading towards more process automation.”

Where payments had been executed in a decentralised model, they were slow because of the high administrative burden and the high volumes of physical document flows in both local currency and cross-border payments. Around two years ago, Bharti Airtel started focusing on its cash management operations and formed ACE (Airtel Centre of Excellence). Today, the ACE finance team has 687 employees, with resources spread across India and Africa. To be able to carry out its day-to-day operations a 15-member team is required by the C&B unit (the Adam Smith Award winning outfit).

Re-engineering

The physical modes of payment, such as cheques and demand drafts, were intrinsic in the payment methodology, but were taking up too much time and effort in processing. Additionally, considerable C&B resources were being absorbed in handling queries related to unique transaction record (UTR) numbers and other payment related matters. This was partly because the 57 strategic business units (SBUs) were decentralised, payments being made through their different bank accounts.

When Bharti Airtel committed to build a ‘best-in-class’ shared service centre (SSC) for its key operations, including human resources, supply chain and finance, it signalled the arrival of Kapoor’s C&B team. Although C&B was set up as one of the units within the ACE finance vertical, with Citi and HDFC Bank as its key banking partners, it has been able to centralise processes for all 57 SBUs independently – an achievement which Kapoor is immensely, and justifiably, proud of.

One of the main purposes of the ACE was to create a straight through payment process using an automated payments system set in a host-to-host environment. “It’s a competitive world and so we are still trying to build out a highly controlled environment for our cross-border payments,” explains Kapoor, adding that where the country’s central bank – Reserve Bank of India (RBI) – regulatory compliance had previously restricted the extent to which this could be rolled out, these restrictions have now been removed. In relation to this, he says that a “clean-up task” is now underway to meet RBI regulations as they relate to data and systems and to facilitate closer system and process integration. The C&B team is currently working closely with Citi and HDFC Bank to develop a tool to fully automate internal and external foreign vendor payments.

Measurable improvements

Already, Kapoor notes, the ACE unit has gone a long way towards streamlining the needs of the C&B vertical. The first positive change, he recalls, was introduced through the re-design of the internal banking structure. Now bank account allocations are made based on legal entities rather than the SBU-based model, a move that reduced bank account numbers from 57 to 16. Further, an internal policy revision made electronic funds transfers (EFT) mandatory for all payments and as a result the percentage of transactions involving physical payments instruments (primarily cheques) fell from 21% to 1%. System integration has completely eliminated clerical errors for both Indian ruppee rates (INR) and cross-border payment processing (down from a rather unsteady 40%).

A number of other improvements to service provision, both internally and externally were derived from the project. Kapoor notes that as an outcome of the pooling of payment bank accounts and close monitoring of payment transactions, the forecasting efficiency rose from 58% to 96%. “This discipline in fund management released working capital of up to $30m and interest costs were reduced from INR 6.6m per month to INR 0.3m per month.” With considerable reduction of the existing administrative burden, the team number could be reduced from 57 to 11 FTEs.

“We were the first Indian telecom company to go with the SSC model for all operational activities. But nowadays, due to stiff competition, all companies are looking to explore innovations which will positively impact liquidity and most of the organisation is now going with this model.”

For Kapoor, there is no substitute for electronic billing and payment and its adoption within C&B is whole-hearted. “In fact, we are close to 99.5% on EFT payouts,” he states. “As the business grows it’s important for us that we implement an end-to-end and machine-to-machine process, which is an automated and controlled process in itself.” In this respect, progress is ongoing but, he states, the project is still “in review mode, instead of doer mode, especially for cross-border payouts”. So, whilst C&B uses the firm’s ERP system (Oracle R12) for payments, executing host-to-host (with the ERP talking to the bank servers), Kapoor says the team is still working closely with C&B’s banking partners to develop reverse file upload (through host-to-host methodology) – an automated tool to feed back all payment reference details to the ERP for both external and internal vendors.

Kapoor firmly believes that a decentralised model does not help in ensuring processes and controls are in place, it does not enable the replication of learning across all units – especially where learning from mistakes is concerned – and nor does it facilitate alignment with successful innovations carried out in any of the units. As such, the technological aspirations of Kapoor and his C&B team are worthy of respect.

However, not every aspect of operational treasury is subject to the current upgrade path. “To be honest, the treasury function cannot completely get rid of spreadsheets,” he admits. It is, he adds, always important for his team to perform some functions to analyse data, which he feels can only be done on a spreadsheet. Whilst he feels it is important for all individuals in the team “to rely more on technology as the output is 100% accurate”, as time passes, it is also important “to change with the times, or else we will be left behind with old methodologies which might not be healthy for the process or the organisation”.

If this sometimes means going it alone, Bharti Airtel will take the initiative; the set-up of the ACE is a case in point. “We were the first Indian telecom company to go with the SSC model for all operational activities. But nowadays, due to stiff competition, all companies are looking to explore innovations which will positively impact liquidity and most of the organisation is now going with this model.”

Of course, automation and shared services are not designed to remove all processes from treasury operations and Kapoor’s C&B team invests much time and effort trying to meet a number of expectations. In addition to the ongoing process of building out the in-house banking and payment facilities, cash forecasting has to be as accurate as possible (between 96% to 99%) and there is also a need to lower the cost of inter-company payments, transfers and allocations “by taking prompt action in day-to-day business”.

Onwards and upwards

Bharti Airtel has successfully created a strong SSC model and has been able to centralise all 57 SBUs in India within “an extremely ambitious timeline” of less than two years. Now that all cash and bank operations are consolidated and stabilised under the umbrella of ACE C&B, the company is ready to take on an additional challenge. This, reports Kapoor, is the development of C&B operations for the company’s recent $10.7 billion acquisition of Zain Telecom (a mobile provider operating across the Middle East and North Africa).

“For me, as Head of ACE C&B, it is very difficult to consolidate all the banking activities spread across 18 countries in Africa under one roof; it is a huge challenge.” Notwithstanding the pressures of consolidation and integration, Kapoor says Bharti Airtel is ready for the African “treasure hunt”. “While our journey starts towards developing C&B operations for Africa, we need to keep in mind the lessons learnt when we were forming ACE C&B for India,” he comments.

“An end-to-end road map has to be drafted with mile stones to ensure that there are no surprises.” He acknowledges that “the next stage of the journey” cannot be rushed and that the team needs to move “step-by-step” to centralise the treasury operations function. Policies also need to be revisited locally to ensure that the company is mitigating all risks and that it has tight controls over day-to-day operations. This, he notes, will help in making liquidity “visible, available and usable”, and improve the accuracy of cash forecasting in all 18 African country operations.

And for Kapoor himself? “I would like to have a more diversified role where I look forward to mixing risk and credit management into my operational duties.” As one who has taken the challenge and succeeded in ensuring Bharti Airtel’s ACE C&B unit can fluidly process 90,000+ transactions per month through a newly instigated centralised model, with just a handful of staff, enrolling for a spot of professional training may seem like a well-earned break.

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